Why would Amgen want to buy Alexion? Analysts call hotly rumored takeover unlikely, but seize the moment
A rumor that Amgen is closing in on buyout deal for Alexion has sparked a guessing game on just what kind of M&A strategy Amgen is pursuing and how much Alexion is worth.
Mizuho analyst Salim Syed first lent credence to the report out of the Spanish news outlet Intereconomía, which said Amgen is bidding as much as $200 per share. While the source may be questionable, “the concept of this happening doesn’t sound too crazy to me,” he wrote.
Alexion $ALXN, which opened at $113.6 Thursday, ended the day up 8% at $123.49.
The deal — or any further evidence of it — has yet to materialize, and a number of analysts are filling the void with their own takes on why it probably never will.
“In our view, such combination does not make strategic sense and would not fit Amgen’s strategic matrix,” Yaron Werber of Cowen began. “Such a deal would roll Amgen backwards just as it is beginning to see a new dawn of growth ahead.”
Citing a conversation with management, Werber added that Alexion — despite its lucrative rare disease portfolio — does not seem to check any boxes for Amgen. The biotech’s orphan focus appears at best an awkward fit to Amgen’s expertise in oncology, inflammation and cardiovascular disorders. More importantly, swallowing Alexion and its Solirus cash cow would mean dealing with more patents and biosimilars at a time Amgen is trying to move away from legacy products, he noted.
In fact, Amgen is behind one of these biosimilars going after Alexion’s star C5 antibody, with a Phase III trial underway.
However Amgen would go about resolving that direct competition, those potential FTC headaches or divestiture efforts don’t make it the most logical acquirer of Alexion, SVB Leerink’s Geoffrey Porges wrote. But that doesn’t mean others shouldn’t consider it.
Seizing on the opportunity to reiterate his bullish assessment of Alexion, he added that the company should be a prime candidate for companies with the firepower to execute a sizable deal — and that $200 per share is a reasonable price.
At the end of the day, Porges surmised, the undervaluation of Alexion stock was likely a reason why investors were so eager to seize onto the rumored takeover.
(O)ur thesis remains that if Alexion’s stock doesn’t naturally appreciate towards the range implied by this speculation, then acquisition speculation, and interest, will indeed surface, thus finally generating positive returns for the company’s long-suffering stockholders.